View full sizeAttorneys (left to right) Chris Cauble and Mike Williams stand with David Youngbluth and Dennis Fallow at a news conference Thursday. Youngbluth and Fallow say their elderly parents were denied legitimate claims for long-term care by Bankers Life & Casualty Insurance Co.Stuart Tomlinson/The Oregonian

Four Oregonians filed a federal class-action lawsuit Thursday, accusing Bankers Life and Casualty Co. of elder abuse in how it denied and delayed long-term care insurance claims and raised premiums without improving benefits.

The suit, filed in U.S. District Court in Portland, comes nearly three months after a federal magistrate in Medford ruled that Chicago-based Bankers had breached its long-term care insurance contract with a now-deceased Grants Pass woman.

It also follows years of complaints by state insurance commissioners and consumers in Oregon about Bankers claims handling practices.

"Bankers Life wrongfully withheld payments for people who've applied for assisted-living expenses," said Christopher Cauble, one of the attorneys bringing the case, during a press conference in Portland on Thursday. "They've wrongfully delayed payments. They've created legal hurdles and legal red tape."

A spokeswoman for Bankers parent CNO Financial Group Inc. said it does not comment on pending litigation.

The class action names Carmel, Ind.-based CNO and Conseco Life Insurance Co., and also alleges breach of contract, breach of promises, fraud, negligence and intentional misconduct. It seeks a judge's approval to represent an estimated class of 9,000 Oregonians and their relatives dissatisfied with their Bankers policy.

Long-term care insurance helps pay for nursing, assisted living, adult foster or home health care for elderly and people with disabilities. Bankers has been the focus of multiple complaints nationwide about its long-term care claims and other insurance products.

Oregon Insurance Division records show that between 2005 and 2011, Bankers had the highest rate of consumer complaints among 19 to 20 long-term care insurance providers in the state. Bankers also had the highest rates of complaints about its health insurance in 2005, 2006 and 2008 and annuities from 2005-09.

In 2008, Conseco Inc. agreed to pay $6.3 million in penalties and restitution to settle complaints brought by 40 state insurance regulators about the behavior of Bankers and subsidiary Conseco Senior Health Insurance Co. It also agreed to make $26 million in claims-management improvements.

Oregon was not part of the agreement, attorneys said.

Last year, Bankers paid $3.2 million to five states to settle allegations that it had failed to live up to terms of the 2008 settlement. The multi-state review found Bankers inappropriately denied maximum benefit claims and failed to investigate and settle claims in a timely matter, the Pennsylvania Insurance Division said. The problems related to Bankers' long-term care, annuities and life insurance policies.

"At best, there's a culture of indifference and incompetence at Bankers Life," said Michael L. Williams, an attorney bringing the class action. "But we suspect when we get to the bottom of this that they've always had an intentional plan to save millions of dollars of claims payments by denying and delaying routine claims."

Lorraine Bates and her husband Charles Ehrman Bates are lead plaintiffs in the Oregon class-action lawsuit along with and Eileen Burk and her son David Youngbluth. Also named as a defendant was James D. Peterson, a sales agent in Oregon.

According to the complaint, Bankers said the adult foster home that 87-year-old Lorraine Bates moved into in 2009 in Union County didn't meet its policy requirements. The Oregon Insurance Division in 2011 later said that Bankers would pay her claim, 19 months after she first submitted it.

Youngbluth hired an attorney after becoming frustrated trying to file a claim for his 90-year-old mother, who moved into assisted living in 2008 after a fall. The lawsuit claims Bankers owes Burk three months of unpaid benefits.

The lawsuit claims Bankers also violated the state's elder abuse law by selling policies without disclosing large future premium hikes that have come with no similar increase in benefits, despite rising health care costs.

Burk's premiums nearly doubled to $209 a month in 2010, according to the suit. Bates' premiums, which started at $278 a month in 1998, now cost $778 a month, the complaint says.

In the Medford case earlier this year, U.S. Magistrate Judge Mark Clarke found Bankers failed to abide by its policy when it refused to cover all the costs of Katherine Fallow's certified home health care provider. The provider had been certified in Washington state, but Bankers said the provider needed to be a certified nursing assistant or registered in Oregon.

Fallow passed away shortly after the case was filed in 2011, but her son has pressed on with it.

"I think they have an obligation to society to make things easier for older people," said Dennis E. Fallow, who said he worked as a loss prevention consultant for an insurer. "We're pursuing it because they owe us $40,000. They shouldn't get away with this."